Radar on Medicare Advantage

Nearly two years after Nebraska voters approved a measure to expand Medicaid, the state on Aug. 1 began the process of enrolling eligible adults for coverage effective Oct. 1. Approximately 90,000 Nebraskans will be newly eligible for Medicaid under the Heritage Health Adult (HHA) program, which will leverage the existing Heritage Health managed care structure by enrolling adults into one of the state’s three contracted managed care organizations. Those MCOs are Nebraska Total Care (Centene), UnitedHealthcare Community Plan of Nebraska and Anthem, Inc.’s newly acquired Medicaid plan from WellCare. The additional Medicaid lives in Nebraska will have a minimal impact to MCO earnings per share (EPS), according to Credit Suisse. “Assuming an even split of lives and a roughly $400 [per member per month payment], we estimate that CNC [Centene], UNH [UnitedHealth Group], and ANTM [Anthem] have a roughly $144 mln annual revenue opportunity from Nebraska Medicaid expansion,” wrote securities...

Missouri voters on Aug. 4 approved a constitutional amendment to expand Medicaid coverage, reflecting a trend of ballot-driven expansion initiatives in recent years that has been accelerated by the COVID-19 pandemic. Missouri is the second conservative state to approve expansion during the pandemic; Oklahoma voters on June 30 narrowly approved a ballot measure to expand Medicaid in that state.

The ballot measure requires Missouri to expand Medicaid to adults between the ages of 19 and 65 with incomes up to 138% of the federal poverty level (FPL) by next July, leaving 12 states — mostly led by Republicans — that have not adopted expansion under the Affordable Care Act (see infographic, p. 6).

✦ The Pennsylvania Dept. of Human Services (DHS) on July 8 named the successful respondents to its latest request for applications to serve some 2.6 million HealthChoices enrollees, but the agency said it is unable to move forward with the selections due to pending protests. Geisinger Health Plan, Health Partners Plans, UPMC for You and Vista Health Plan (AmeriHealth Caritas) were selected for statewide contracts, while UnitedHealthcare was chosen to serve the Southeast region only. At press time, two applicants that were not selected filed protests, noted DHS. Those are likely to be Centene Corp. and CVS Health Corp.-owned Aetna, since both companies bid and did not win any regions, observed securities analyst Steve Valiquette in a note from Barclays Research. This is the third time DHS has tried to reprocure the contracts, which are worth an estimated $13 billion, according to Barclays. Visit https://bit.ly/3j2dwkt.

✦ Walmart Inc. has established a new insurance division that will initially focus on selling Medicare Advantage plans in Texas, although details of the new venture are scant, according to multiple news reports. The insurance agency has been actively recruiting for positions that will allow employees to work from home and/or at a Dallas-based call center beginning in August, according to the Arkansas Democrat Gazette. In a July 7 research note, SVB Leerink securities analyst Stephen Tanal called the move “an incremental, long-term positive” for the publicly traded managed care organizations. He noted that Walmart has a major presence in Texas, and that the MA market share there is “very concentrated in the hands of” UnitedHealthcare and Humana Inc., which has a longstanding Part D partnership with Walmart. Contact Tanal at stephen.tanal@svbleerink.com.

With an increasing share of seniors enrolling each year, a healthy rate environment and a meaningful return on scale, Medicare Advantage is largely seen as a safe space for insurers and one that is likely to drive mergers and acquisitions (M&A) for the foreseeable future. But one analyst suggests there’s room for growth in managed Medicaid, and that Molina Healthcare, Inc. could be positioned as the next aggregator of Medicaid managed care plans.

In the midst of a financial turnaround that involved major management changes and a corporate restructuring effort, Molina in February delivered impressive fourth-quarter and full-year 2019 earnings and unveiled two small acquisitions that would have given the company nearly 100,000 new enrollees combined (RMA 3/5/20, p. 5). Although one of the deals fell through, Molina on July 1 said it completed the acquisition of certain assets of YourCare Health Plan, Inc., a nonprofit subsidiary of Monroe Plan for Medical Care with approximately 47,000 Medicaid members in seven counties in the Western New York and Finger Lakes regions.

As shutdowns tied to the COVID-19 pandemic have led to the highest unemployment rate seen in the U.S. since the Great Depression, the current recession appears to be reversing the trend of Medicare “age-ins” putting off enrollment into the program, observes a new study from Deft Research. And while it’s hard to predict consumer behavior during a pandemic, insurers’ age-in campaigns should take into account the financial constraints newly eligible beneficiaries may be facing.

As the unemployment rate hit 11.7% in May, the number of out-of-work people between the ages of 60 and 64 came close to 1.4 million people, compared with about 300,000 a year ago and 650,000 at the height of the Great Recession in the early 2010s, according to U.S. Dept. of Labor data cited in the Deft brief. And while 78% of consumers surveyed by Deft in 2013 anticipated enrolling in Medicare upon turning 65, that rate experienced a drop in subsequent years — hitting a low of 52% in 2017 before climbing to 57% and 58% in 2018 and 2019, respectively (see chart). Now, Deft’s 2020 Age-In Study finds that 61% of consumers plan to enroll in Medicare when they become eligible.